Mumbai: India's domestic air passenger demand plummet to 1.8 per cent in July following the end of tourist season while the cumulative growth in traffic in the first four months stood at a mere 1.6 per cent, the report said.
According to rating agency Icra, the international traffic catered by the domestic airlines de-grew 14.7 per cent in July over 0.6 per cent of the industry with the local carriers continuing to underperform the industry on international routes and their market share declining by 528 basis points to 32.1 per cent in July over the year-ago period on account of the under-performance.
The growth in the industry capacity (measured in available seat kilometres ASKMs) continued to be muted in July at 3.5 percent, primarily due to the grounding of Jet Airways.
"Furthermore, the Indian airlines have been increasing focus on international operations as witnessed in increasing capacity deployment, due to higher opportunities in overseas markets from India. The same is evident from increasing capacity deployment by some of the carriers on international routes," said Kinjal Shah of Icra.
Read more:Bank credit growth slows to 10.24%, deposits at 9.73%
Observing that the jet fuel prices first declined sequentially in June and July by 0.3 per cent and 5.5 per cent, respectively, Icra said they, however, increased sequentially by 3.3 per cent in August while declined 7.9 per cent year-on-year.
September 2019 again witnessed a sequential as well as the year-on-year decline of 0.9 percent and 9.1 percent, respectively, it said adding the decline, however, may not have a material impact on the profitability of the airlines if they continue to witness pressure on passenger load factors which have been declining sequentially since May.
Icra also said that given the favourable international scenario, few more airlines are likely to enter into international flying from India or expand capacities on international routes in the near future to tap the opportunity.
The domestic space, however, will continue to remain critical for the carriers as it provides sizeable potential as well as feed-in traffic for the international routes, it said.
As the airlines continue to expand their fleet, resulting in a gradual correction in the demand-supply imbalance and thus a further moderation in airfares, the domestic passenger traffic growth is expected to increase in the near-to-medium-term, said, Shah.
